NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Pensions and Firm Performance

Steven G. Allen, Robert L. Clark

NBER Working Paper No. 2266
Issued in May 1987
NBER Program(s):   LS

This paper examines how pension plans affect employee behavior and firm performance. Theoretically, the impact of pensions on firm performance cannot be predicted. Firms with pensions should have lower turnover rates and more efficient retirement decisions; their employees will be less likely to shirk. On the other hand, pension compensation is not very closely linked to worker performance and there is some risk that turnover may fall too much. The evidence indicates that although wages do not seem to fall with pension compensation, profit rates are not affected by pension coverage. This suggests that pension coverage is associated with higher productivity, a proposition that is supported by indirect evidence on pensions, turnover, and productivity but not by direct tests of how pension coverage and productivity are correlated.

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Document Object Identifier (DOI): 10.3386/w2266

Published: Allen, Steven G. and Robert L. Clark. "Pensions and Firm Performance," Human Resources and Firm Performance, ed. by Morris Kleiner, et. al. Madison, WI: Industrial relations Research Association, 1987.

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